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How Good Are Netflix Originals? It's Complicated.

It depends on what measure you use.

The battle regarding the quality of Netflix(NASDAQ:NFLX) original programs is ongoing between bulls, who claim the company has a long list of award-winning fare among its programs (it does) -- and bears, who claim that while Netflix admittedly has some gems, the streamer also has a much longer list of what can only be described as drivel (also true). Both views have their merits, but as a longtime Netflix customer and shareholder, I tend to agree more with the former than the later.

Fortunately, the folks over at industry specialist Streaming Observer have compiled some figures in a pair of reports to help separate the facts from the opinions. If you want a black-and-white answer to the quality question, however, you'll likely be disappointed. The answer is somewhat nuanced -- and complicated.

The answer according to IMBD

In a report released this month, Streaming Observer compared Netflix offerings with the top 250 television shows as rated by users of IMDb -- the Internet Movie Database -- which was acquired by Amazon.com in 1998.

It's important to note that Netflix still offers plenty of licensed content on its streaming service, and that comes into play here. Of the top 250 programs as rated by IMDb, 28% or 69 of those programs can be seen on Netflix. This includes such time-honored favorites as Planet Earth, Breaking Bad, and The Twilight Zone. Paring that list down even further, viewers can find 18 Netflix original series among the top 250. Some of the company's biggest hits make the list, including Black Mirror, Stranger Things, and The Haunting of Hill House.

Streaming Observer noted that this "is an impressive accomplishment for a platform that has only been producing original content for about 5 years." While it seems like a fairly solid showing, it doesn't tell the whole story.

What Rotten Tomatoes and Metacritic have to say

Another measure of quality is ratings on aggregation sites like Rotten Tomatoes and Metacritic. In a separate report, Streaming Observer compiled data from both sites to determine which streaming services and pay TV networks were getting the most bang for their buck in terms of quality. The report compared scores from a number of programmers, and the rankings on a scale of 100 are summarized in the table below:

There are only five points separating the first seven spots on the list, so it isn't as if Netflix had a horrible showing. This data merely indicates that by this gauge of audience interest, it scores slightly lower than some competitors. Streaming Observer also pointed out that Netflix's score of 70 had slipped slightly from the 73.6 it got in last year's survey.

An apparent contradiction?

Since these two reports come to slightly different conclusions, I reached out to Streaming Observer and asked if it could comment on the seeming disparity of the findings.

"Netflix has definitely had some hits. Stranger Things, House of Cards, Ozark, Daredevil...the list goes on," said Chris Brantner, Streaming Observer's founder. "That being said, it's worth noting that the company now has around 700 original series. So having 18 in the top 250 doesn't necessarily mean the company has a good batting average. It could be argued that there's a lot more quality than quantity."

What Netflix is doing

Netflix is likely aware that there's room for improvement. In recent months the company has gone on something of a cancellation spree. Orange Is the New Black and House of Cards have been among the platform's signature shows, but Netflix has announced that each program will be retiring after its next season. While a number of Marvel series remain, like Daredevil and Jessica Jones, Netflix gave the ax to Iron Fist and Luke Cage, effectively putting an end to The Defenders as well.

These cancellations free up Netflix to focus on higher-quality fare like the Alfonso Cuaron-helmed Roma, The Ballad of Buster Scruggs, directed by Joel and Ethan Coen, and Martin Scorsese's long-awaited mobster drama The Irishman. Each of these productions is expected to make its way around the awards-show circuit, a hint that Netflix is seeking to up its game in terms of quality.

Netflix original The Haunting of Hill House is a hit with viewers. Image source: Netflix.

Final thoughts

Netflix recently topped 137 million streaming subscribers across the globe, with more joining every month. Ultimately, its goal is to have something for everyone, so not every show needs to be a smash hit. One advantage to producing so many shows, however, is that it gets more than its fair share of winners, enough to continue attracting viewers willing to fork over $8 per month. Netflix made history earlier this year when it beat out HBO for the largest number of Emmy nominations, breaking a 17-year streak. It then tied HBO for total Emmy awards at 23 for the year, marking the first time a streaming service had topped the list.

Having more award-winning original content would surely help Netflix attract additional subscribers, but it will also help improve its batting average and reputation for quality.

Author

Daniel W. Vena, CPA, CGMA is a long-term investor searching for intangibles that provide explosive growth opportunities in his investments. He served on active duty with the US Army and has a Bachelor's degree in accounting.
Follow @dannyvena